MERCHANDISING OPERATIONS (CONCEPTS AND DISCOUNTS)

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

• sales invoice

• purchase invoice

• credit memorandum

• debit memorandum

The arrangements between buyer and seller as to when payments for merchandise are to be

made are called

• credit terms

• net cash

• cash on demand

• gross cash

In credit terms of 1/10, n/30, the "1" represents the

• number of days in the discount period

• full amount of the invoice

• number of days when the entire amount is due

• percent of the cash discount

Merchandise with a sales price of P500 is sold on account with term 2/10, n/30. The journal entry to record the sale would include a

• debit to Cash for P500

• Debit to Sales Discounts for P10

• Credit to Sales for P500

• Debit to Accounts Receivable for P490

Which of the following accounts has a normal credit balance?

• Sales Returns and Allowances

• Sales

• Merchandise Inventory

• Delivery Expense

The entry to record the return of merchandise from a customer would include a

• debit to Sales

• credit to Sales

• debit to Sales Returns and Allowances

• credit to Sales returns and Allowances

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

• sales on account

• sales returns

• cash sales

• sales when the credit card company remits the cash

A retailer purchases merchandise with a catalog list price of P10,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?

• P7,500

• P10,000

• P9,800

• P7,350

Apple Co sells merchandise on credit to Zea Co in the amount of P8,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

• P160, September 30

• P80, September 30

• P80, September 25

• P160, September 25

Apple Co sells merchandise on credit to Zea Co in the amount of P8,000. The invoice is dated on September 15 with terms of 1/15, net 45. If Zea Co. chooses not to take the discount, by when should the payment be made?

• September 30

• October 30

• October 15

• September 25